Deferring Retirement Age Still Doesn’t Guarantee Security, Study Says

Retirement age deferral is not completely adequate to mitigate retirement income adequacy problems for most households, even when the retirement age gets pushed into the 80s, says a 2011 Employee Benefit Research Institute (EBRI) Issue Brief . Only 30% Baby Boomers in the lowest income quartile who retire as soon as they are eligible will have adequate retirement income, according to EBRI’s simulated graph, and it would take waiting to retire until age 84 in order for 90% of these households to have a 50-50 chance of having sufficient means.

EBRI developed a Retirement Security Projection Model® (RSPM) in 2003 that gives an assessment of national retirement income prospects, with a basic objectives of simulating the percentage of the population that will be “at risk” of having retirement income that is inadequate to cover basic expenses and pay for uninsured health care costs for the remainder of their lives once they retire.



EBRI says that in 2010, 47.2% of Early Boomers (those born between 1948–1954) were simulated to be at risk of not having sufficient retirement income to pay for “basic” retirement expenditures as well as uninsured health care costs. On the other hand, 43.7% of Late Boomers (born between 1955-1964) were at risk, while the risk for Generation Xers (born between 1965-1974) went up somewhat to 44.5%.

If retirement age is deferred, though, and depending on how long it’s deferred, retirees can improve their chances of having adequate retirement income, at least to some extent. For 49.1% of the lowest preretirement income quartile households, an EBRI chart shows, retiring at age 75 would have at least a 50% probability of success (where success is defined as not running short of money in retirement), and that increases to 90.2% at age 84. However, changing the threshold of success to 70% results in a smaller amount of those in the lowest preretirement income quartile having adequate retirement income at age 84, with only 40%.

For those in the highest preretirement income quartile, the percentage of adequate retirement income as a result of deferred retirement has a much slighter increase, as they are more likely from the start to have a 50% chance of retiring with sufficient means.

Additionally, EBRI lists whether the worker is still participating in a defined contribution plan after age 65 as one of the factors that makes a major difference in the percentage of households satisfying the retirement income adequacy thresholds at any retirement age. Further, EBRI says the true value of deferring retirement age is substantially muted if the full stochastic nature of nursing home and home health care costs is not appropriately modeled.

View the full brief here.

Written by Alyssa Gerace

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  • This is the first time I have read early boomers as only consisting of those born after 1947 but before 1955.  The term “Baby Boomers” are considered to be those born after 1945 but before 1965.  I have never seen any definitions like those used in the EBRI article.
    The Social Security Administration Office of Policy states:  “…early baby-boomer retirees (those born in 1946 to 1955), and late baby-boomer retirees (those born in 1956 to 1965)….”  Wikipedia states:  “The United States Census Bureau considers a baby boomer to be someone born during the demographic birth boom between 1946 and 1964.”  The US Census Bureau indeed states in one easily found document:  “Selected Characteristics of Baby Boomers 42 to 60 Years Old in 2006.” 
    So why is the EBRI (Employee Benefits Research Institute) redefining these segments?  Is it to skew the results?  The EBRI would not exist if it were not for the collective bargaining employee benefit plans through their IFEBP (International Foundation of Employee Benefit Plans) which supports the EBRI.  Is the study skewed to support a position taken by the leading unions in the country?
    Before blindly accepting this study as a reasonable presentation of the retirement picture of Baby Boomers, some work needs to be done to see what else these authors might have skewed to somehow in some twisted way meet the desired results of the publisher.  Knowing the publisher and looking at the definitions, one is left to wonder. 

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